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Legislature approves a state budget, averting government shutdown

Here are some of the things lawmakers agreed on.

That's a wrap. 

The divided Minnesota Legislature on Wednesday — hours before their midnight deadline to avert a government shutdown — passed a two-year $52 billion state budget, as well as a tax relief package with nearly $1 billion in tax cuts. 

Lawmakers passed more than a dozen bills related to the state budget during the special session, which was held because they couldn't reach agreements during the regular session that ended in May. The bills dealt with everything from elections and state government to education, public safety, natural resources, housing, transit, and health and human services, among other areas.

Gov. Tim Walz signed all the remaining budget bills into law before the new fiscal year began at midnight.

“Tonight, I am proud to sign legislation that invests in our students, bolsters public safety, and builds a stronger economy,” Gov. Walz said in a statement. “This legislation will help small businesses create jobs, allow our students to catch up on learning, and make our communities safer for every Minnesotan.

"Minnesota’s COVID-19 Recovery Budget ensures we get back to better for all Minnesotans,” the governor added. 

What's in the budget?

There are hundreds of provisions in the 14 bills the Legislature approved during the special session, all with implications for Minnesotans. 

Here are the highlights: 

More money for schools: The education bill includes $1.2 billion for E-12 schools over the next four years, marking the single-largest increase in school funding in 15 years. It also includes targeted funding for special education students and English language learners; $35 million to get and keep more teachers of color in classrooms; and funding for mental health services and suicide prevention. 

Helping veterans: The state government bill includes policy provisions aimed at preventing and ending veteran homelessness and suicides, as well as nearly $1.25 billion in General Fund spending (up $78.5 million) funding for the legislature, governor's office, Constitutional offices and several state agencies, boards and commissions.  

Market Bucks: The state government bill also includes funding for the popular Market Bucks program, which allows low-income Minnesotans easier access to healthy foods at local farmer's markets. 

End to Walz's emergency powers: The state government bill included an end to Walz's emergency powers, which he's been using since March 2020 to help control the COVID-19 pandemic.

Related: Walz uses executive actions to enact some police reform

Some police reforms: The $2.64 billion public safety and judiciary omnibus bill contains some police reform provisions, including restrictions on no-knock warrants, increasing mental health response in crisis calls, reforming civil asset forfeiture by law enforcement and provides body cameras for state law enforcement agencies. The bill establishes a Missing and Murdered Indigenous Relatives Office and a Youth Justice Office. It overhauls how Minnesota enforces safety standards and reforms use of force guidelines in Minnesota jails and prisons. But some DFLers were critical that more wide-ranging police reform provisions were stripped out in order to strike a deal.

Related: MN Legislature's agreement on public safety bill leaves out key police reforms

Help for businesses hurt during COVID: The jobs and labor bill includes $70 million in funding for the Main Street COVID-19 Relief Grant Program to assist businesses affected by the pandemic; $80 million for the Main Street Economic Revitalization Program to address needs that have developed over the past year; appropriates funding to support Minnesota’s workers through workforce development grants and broadband development grants. In addition, the bill strengthens workplace protections for expectant and new parents and provides funding to increase the number of Minnesota OSHA safety and health investigators.

Mitigating climate change: The environment and natural resources bill includes money to help mitigate climate change, address emerging pollution issues and improve management of and access to the state's natural resources. 

Historic health and human services investments: The health and human services bill includes extended postpartum coverage under Medical Assistance; expanded child care access; expanded lead risk assessment; tobacco and vaping prevention; better preventative care under Medical Assistance; and new benefits for children with severe asthma under Medical Assistance.

Roadmap to end eviction moratorium: The housing bill includes a plan to end the eviction moratorium put in place during the COVID-19 pandemic by providing temporary provisions for tenants to avoid getting kicked out of their home or their leases being terminated by helping ensure renters have enough time to access federal funding for rental assistance. The bill also makes historic investments in housing initiatives, including $100 million in housing infrastructure bonds, local housing trust funds and a shelter task force. 

Support for higher education: The higher education bill includes support for Minnesota's college students impacted by COVID-19 by providing food, housing and mental health. It also contains funding for the University of Minnesota and Minnesota State Colleges and Universities, for emergency assistance for postsecondary students, grants to teachers in shortage areas and grants for underrepresented student teachers. 

Biofuels infrastructure: The agriculture bill includes funding for biofuels infrastruction and an increase in the Bioincentive Program. 

Help for farmers: Other provisions in the agriculture bill include addressing the state's meat processing capacity; increases for the Urban Agriculture Program, Good Food Access Program, and Farm to School Program. It also establishes an Emerging Farmers Office and provides ongoing funding for translation services for the Minnesota Department of Agriculture’s Emerging Farmer Working Group. There is also a significant investment in farm outreach and rural mental health.

Clean energy funding: The commerce and energy bill establishes consumer protections and helps create jobs by expanding the state's clean energy economy. It includes funding for clean energy research, solar projects and schools and universities, an extension of the Solar Rewards Program and the creation of an Energy Transition Office at DEED. 

Roads, bridges funding: The transportation bill includes investments for the state's roads and bridges and enhancements to the multimodal transportation system. It also provides funding for Minnesota State Troopers, funding to establish a second daily passenger train between the Twin Cities-Chicago, and establishes policy changes to prevent drivers' licenses suspensions for minor court violations.

Related: With help from state funding, Amtrak will add second daily route from St. Paul to Chicago

Tax bill

After the Democrat-controlled House and Republican-controlled Senate got the budget bills done (the $21 billion education funding package was the last one), each chamber passed the tax bill, sending it to the governor. (The tax bill didn't have any impact on the budget or looming government shutdown.)

There are no new taxes in the budget bills, thanks to federal aid and Minnesota's tax revenues being much better than expected. Earlier in the year, Walz had proposed increasing the taxes on the wealthiest Minnesotans, which Republicans oppose.

The bill uses federal aid from the American Rescue Plan to give tax cuts for workers who received unemployment insurance benefits and small businesses that got federal Paycheck Protection Program loans.

The bill also expands the Working Family Tax Credit, and provides new aid totaling $20 million over six years for counties to fund services and programs that prevent family homelessness.

“After months of committee hearings and public discussion, our divided Legislature agreed to pass a tax bill that focuses on making sure folks can build back after COVID-19 and recover,” said Rep. Cheryl Youakim, DFL-Hopkins, chair of the House Property Tax Division. “This is a fair and balanced bill. It will provide flexibility on Tax Increment Financing for cities to aid in the development of affordable housing and economic development projects, allow for energy improvement projects as well as enable local communities to better serve their citizens.”

What's next?

Since lawmakers agreed to end Gov. Tim Walz's emergency powers on Thursday, July 1, they won't be required to convene for special sessions monthly as it has done for more than a year (18 months) due to constitutional requirements during a state of emergency. 

The Minnesota House adjourned sine die at 1:14 a.m. Thursday, with plans to return in January 2022 for the next regular legislative session. However, the Minnesota Senate plans to be back on Friday — they won't be able to pass bills though seeing as the House won't be in session. 

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